Exhibit 10.21
TRANSITION, CONSULTING, NONCOMPETITION AND
RETIREMENT AGREEMENT
This Transition,
Consulting, Noncompetition and Retirement Agreement (the
“Agreement”) is entered into as of March 23, 2005,
by and between First Keystone Financial, Inc. (the
“Company”), First Keystone Bank (the
“Bank”) and Donald S. Guthrie (the
“Consultant”).
WITNESSETH:
WHEREAS, the
Consultant currently serves as Chairman of the Board and Chief
Executive Officer of the Company and as President and Chief
Executive Officer of the Bank;
WHEREAS, the
Company and the Consultant entered into an employment agreement as
of December 1, 2004 (the “Company Employment
Agreement”);
WHEREAS, the Bank
and the Consultant entered into an employment agreement as of
December 1, 2004 (the “Bank Employment
Agreement”);
WHEREAS, the
Consultant is a participant in the Supplemental Executive
Retirement Plan adopted by the Bank effective March 31, 2004
(the “SERP”);
WHEREAS, the
Consultant desires to retire and to provide services to the Company
and the Bank on a part-time basis;
WHEREAS, the
Company desires to have the Consultant undertake, and the
Consultant is willing to undertake, certain consulting and
noncompetition obligations on the terms and conditions set forth
herein; and
WHEREAS, the
Consultant is willing to relinquish his rights under the Company
Employment Agreement, the Bank Employment Agreement and the
SERP;
NOW, THEREFORE, in
consideration of the mutual covenants set forth herein and other
good and valuable consideration, the parties hereto agree as
follows:
1.
Effective Date . The “Effective Date” shall mean
May 1, 2005.
2.
Consulting Period . The Company and the Bank hereby agree to
engage the Consultant, and the Consultant hereby agrees to provide
services to the Company and the Bank, subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on April 30, 2010 (the
“Consulting Period”).
3.
Consulting Services .
(a)
Duties . During the Consulting Period, the Consultant shall
report to the President of the Company and the Bank, and shall
provide his personal advice and counsel to the Company and the Bank
regarding their operations, customer relationships, growth and
expansion
opportunities and other business
matters that may arise in connection with the business and
operations of the Company and its subsidiaries in the Commonwealth
of Pennsylvania and as may be reasonably requested by the President
of the Company and the Bank or his designee from time to time
(collectively, the “Consulting Services”). It is
contemplated that the Consulting Services will include, without
limitation, monthly meetings or teleconferences between the
Consultant and the President of the Company and the Bank; efforts
by the Consultant to enhance the business activities of the Company
and its subsidiaries in the Commonwealth of Pennsylvania, including
without limitation meeting with existing and potential customers of
the Company and its subsidiaries located in such state; attendance
at certain public functions in the Commonwealth of Pennsylvania on
behalf of the Company and its subsidiaries; attendance at meetings
of the Board of Directors of the Company and the Bank to report on
the business activities of the Company and its subsidiaries in the
Commonwealth of Pennsylvania and attendance at certain functions of
the Company and its subsidiaries. Consulting Services may be
provided in person, telephonically, electronically or by
correspondence to the extent appropriate under the
circumstances.
(b)
Geographic Location . The Consultant shall provide the
Consulting Services in the Commonwealth of Pennsylvania, including
without limitation the market areas of the Company and the
Bank.
(c) Time
Limitation . In no event shall the Consultant be required to
provide Consulting Services hereunder for more than 25 hours per
week or 100 hours in any calendar month during the Consulting
Period, with the maximum monthly hours being pro-rated for the
first and last month of the Consulting Period.
(d)
Directorship . The Consultant shall be appointed as Chairman
of the Board of Directors of the Bank as of the Effective Date. The
Consultant shall continue to serve as Chairman of the Board of
Directors of the Company and of the Bank throughout the Consulting
Period, provided that the Consultant continues to be a director in
good standing during such period. Subject to compliance with its
fiduciary duties, the Board of Directors of the Company agrees to
nominate the Consultant for an additional four-year term of office
as a director of the Company when his current term expires in 2007
and to elect him as a director of the Bank during the Consulting
Period. In addition to the compensation set forth in Section 4
hereof and any fees paid to directors of the Company and the Bank
for attendance at meetings, the Consultant shall receive an annual
fee of $15,000.00 for serving as Chairman of the Board of the
Company and the Bank during the Consulting Period.
4.
Compensation .
(a)
Monthly Payments . In consideration of the obligations and
commitments of the Consultant under this Agreement, including but
not limited to Sections 3 and 8 hereof, the Company and/or the
Bank agrees to pay to the Consultant an amount equal to $12,500.00
per month on the first business day of each month during the
Consulting Period, commencing May 1, 2005 through and
including April 1, 2010 (the “Monthly Fee”).
During the Consulting Period,
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the Consultant shall be treated
as an independent contractor and shall not be deemed to be an
employee of the Company or any affiliate or subsidiary of the
Company.
(b)
Medical and Other Benefits . The Company and the Bank shall
provide medical insurance for the benefit of the Consultant and his
spouse during the Consulting Period, at no cost to the Consultant
and his spouse, with the terms of such coverage being similar to
the coverage provided by the Company and the Bank to their
employees. In addition, the Company and the Bank shall provide
dental and long-term care insurance coverage for the benefit of the
Consultant and his spouse during the Consulting Period, at no cost
to the Consultant and his spouse, with the terms of such coverage
being similar to the coverage provided by the Company and the Bank
as of the date of this Agreement.
(c)
Existing Stock Options . The existing 9,750 vested stock
options currently held by the Consultant to purchase shares of
common stock of the Company shall remain outstanding and
exercisable in accordance with their terms, with the Consultant
having three months following the Effective Date to exercise his
incentive stock options.
(d)
Employee Benefit Plans . The Consultant shall be entitled to
receive his vested benefits under the Company =
s Employee Stock Ownership Plan and
the Bank =
s 401(k) Profit Sharing Plan in
accordance with the terms of such plans. As of the Effective Date,
the Consultant shall no longer be entitled to participate in any of
the employee benefit plans or programs offered by the Company, the
Bank or any of their subsidiaries, and no additional benefits shall
accrue or vest on behalf of the Participant under such employee
benefit plans or programs after the Effective Date, except as set
forth in Sections 4(b) and 4(c) hereof.
(e) Lump
Sum Payment . In recognition of the years of service that the
Consultant has provided to the Company and the Bank and in
satisfaction of the Consultant’s accrued and/or carried over
but unused vacation leave, the Consultant acknowledges the receipt
from the Company and/or the Bank prior to the Effective Date of a
lump sum cash payment equal to $165,519.27.
(f) Use
of an Automobile . During the Consulting Period, the Company
and/or the Bank shall provide the Consultant with the continued use
of the automobile that was provided for the Consultant’s use
immediately prior to the Effective Date. At the end of the
Consulting Period, the Company and/or the Bank shall transfer title
to the automobile to the Consultant.
(g)
Expenses . The Company and/or the Bank shall reimburse the
Consultant or otherwise provide for or pay for all reasonable
expenses incurred by the Consultant at the request of the Company
and/or the Bank, including, but not by way of limitation, the costs
of insurance, repair, maintenance and licensing of the automobile
provided by Section 4(f) hereof, subject to such reasonable
documentation as may be requested by the Company and/or the Bank.
If such expenses are paid in the first instance by the Consultant,
the Company and/or the Bank shall reimburse the Consultant therefor
upon receipt of such reasonable documentation as may be requested
by the Company.
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(h)
Proration . The Consultant’s compensation, benefits
and expenses shall be paid by the Company and the Bank in the same
proportion as the time and services actually expended by the
Consultant on behalf of the Company and the Bank.
5.
Termination of Consulting Services .
(a) Death
or Disability . The Consultant’s services shall terminate
automatically upon the Consultant’s death during the
Consulting Period. If the Company and/or the Bank determines in
good faith that the Disability of the Consultant has occurred
during the Consulting Period (pursuant to the definition of
Disability set forth below), it may give to the Consultant written
notice in accordance with Section 15 of this Agreement of its
intention to terminate the Consultant’s services. In such
event, the Consultant’s services with the Company and the
Bank shall terminate effective on the 60th day after receipt of
such notice by the Consultant (the “Disability Effective
Date”), provided that, within the 60 days after such
receipt, the Consultant shall not have returned to performance of
the Consultant’s duties. For purposes of this Agreement,
“Disability” shall mean the Consultant is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, as determined by
a physician selected by the Company or its insurers and reasonably
acceptable to the Consultant or the Consultant’s legal
representative.
(b)
Cause . The Company and the Bank may terminate the
Consultant’s services during the Consulting Period for Cause.
For purposes of this Agreement, “Cause” shall
mean:
(i) the continued
failure of the Consultant to perform substantially the
Consultant’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Consultant by the Board of
Directors of the Company or the Bank which specifically identifies
the manner in which the Board of Directors believes that the
Consultant has not substantially performed the Consultant’s
duties and after the Consultant has been given a 15 day period
to cure such failure; or
(ii) the willful
engaging by the Consultant in illegal conduct or gross misconduct
which violates any code of conduct of the Company and/or the Bank
or which is otherwise materially and demonstrably injurious to the
Company or the Bank; or
(iii) conviction
of a felony or a guilty or nolo contendere plea by the
Consultant with respect thereto.
For purposes of this provision,
no act or failure to act, on the part of the Consultant, shall be
considered “willful” unless it is done, or omitted to
be done, by the Consultant in bad faith or without reasonable
belief that the Consultant’s action or omission was in the
best interests of the Company and/or the Bank. Any act, or failure
to act, based upon authority given pursuant to a resolution duly
adopted by the Board of Directors or upon the instructions of the
President or a senior officer of the Company and/or the Bank or
based upon the advice of counsel for the
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Company and/or the Bank shall be
conclusively presumed to be done, or omitted to be done, by the
Consultant in good faith and in the best interests of the Company
and the Bank. The cessation of the services of the Consultant for
conduct described in subparagraph (i) or (ii) above shall
not be deemed to be for Cause unless and until there shall have
been delivered to the Consultant a copy of a resolution duly
adopted by the affirmative vote of a majority of the entire
membership of the Board of Directors of the Company or the Bank at
a meeting of the Board of Directors called and held for such
purpose (after not less than ten days’ advance notice is
provided to the Consultant and the Consultant is given an
opportunity, together with counsel chosen by the Consultant, to be
heard before the Board of Directors), finding that, in the good
faith opinion of the Board, the Consultant is guilty of the conduct
described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail. The Company and/or
the Bank may suspend the Consultant’s authority (with a
continuation of the Monthly Fee during such period of suspension)
after the provision of a notice of intention to terminate the
Consultant’s services for conduct described in subparagraph
(i) or (ii) above and prior to the time the Consultant is
given an opportunity to meet with the Board of Directors, and any
such suspension shall not constitute “Good Reason” as
defined in Section 5(c) below.
(c) Good
Reason . The Consultant’s services may be terminated by
the Consultant for Good Reason. For purposes of this Agreement,
“Good Reason” shall mean in the absence of a written
consent of the Consultant:
(i) any failure by
the Company and/or the Bank to comply with any of the provisions of
this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is
remedied by the Company and/or the Bank within 25 days after
receipt of written notice thereof given by the Consultant;
or
(ii) any purported
termination by the Company and/or the Bank of the
Consultant’s services otherwise than as expressly permitted
by this Agreement.
(d)
Notice of Termination . Any termination by the Company
and/or the Bank for Cause, or by the Consultant for Good Reason,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 15 of this Agreement.
For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Consultant’s services under the provision
so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than
30 days after the giving of such notice). The failure by the
Consultant or the Company and/or the Bank to set forth in the
Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the
Consultant or the Company and/or the Bank, respectively, hereunder
or preclude the Consultant or the Company and/or the Bank,
respectively, from asserting such fact or circumstance in enforcing
the Consultant’s or the Company’s or the Bank’s
rights hereunder.
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(e) Date
of Termination . “Date of Termination” means
(i) if the Consultant’s services are terminated by the
Company and/or the Bank for Cause, or by the Consultant for Good
Reason, the date of receipt of the Notice of Termination or any
later date specified therein within 30 days of such notice, as
the case may be, (ii) if the Consultant’s services are
terminated by the Company and/or the Bank other than for Cause or
Disability, the Date of Termination shall be the date on which the
Company and/or the Bank notifies the Consultant of such termination
and (iii) if the Consultant’s services are terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Consultant or the Disability Effective Date,
as the case may be.
6.
Obligations of the Company and the Bank upon Termination of
Consulting Services .
(a) Good
Reason; Other Than for Cause, Death or Disability . If, during
the Consulting Period, the Company and/or the Bank shall terminate
the Consultant’s services other than for Cause, Death or
Disability or the Consultant shall terminate his services by the
Company and the Bank for Good Reason, the Company and/or the Bank
shall pay to the Consultant in a lump sum in cash within
30 days after the Date of Termination the sum of (1) any
accrued but unpaid Monthly Fee of the Consultant through the Date
of Termination (the “Accrued Obligations”), (2) an
amount equal to the present value of the Monthly Fees that would
have been paid through and including April 30, 2010 (the
“Remaining Monthly Fees”), and (3) the present
value of the Retirement Benefits (as defined in Section 9
hereof), with the present values calculated as set forth below. In
addition, the Company and the Bank shall provide the Consultant and
his spouse with the medial and other benefits set forth in Section
4(b) hereof through April 30, 2010 (the “Medical
Benefits”) and shall transfer title to the automobile to the
Consultant as provided in Section 4(f) hereof.
(b)
Death . If the Consultant’s services are terminated by
reason of the Consultant’s death during the Consulting
Period, the Company and/or the Bank shall pay to the
Consultant’s estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination the sum
of (1) any Accrued Obligations, (2) the present value of
the Remaining Monthly Fees, and (3) the present value of the
Retirement Benefits (as defined in Section 9 hereof), with the
present values calculated as set forth below. In addition, the
Company and the Bank shall provide the Consultant and his spouse
with the Medical Benefits and shall transfer title to the
automobile to the Consultant as provided in Section 4(f)
hereof.
(c)
Disability . If the Consultant’s services are
terminated by reason of the Consultant’s Disability during
the Consulting Period, the Company and/or the Bank shall pay to the
Consultant in a lump sum in cash within 30 days of the Date of
Termination the sum of (1) any Accrued Obligations, and
(2) the present value of the Retirement Benefits (as defined
in Section 9 hereof), with the present value calculated as set
forth below, provided, however, that if the Consultant’s
services are terminated by reason of Disability prior to
May 1, 2008, then the Retirement Benefits shall be calculated
as if the annual benefit was paid for 12 years rather than
10 years. In addition, the Company and the Bank shall provide
the Consultant and his spouse
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with the Medical Benefits and
shall transfer title to the automobile to the Consultant as
provided in Section 4(f) hereof.
(d)
Cause; Other than for Good Reason . If the
Consultant’s services shall be terminated for Cause or the
Consultant terminates his services without Good Reason during the
Consulting Period, this Agreement shall terminat
